Page 106 - Mariners Cricket Club (Singapore) - Souvenir Magazine 2020
P. 106
Saudi Arabia sees oil at $50
According to Goldman Sachs analysts, Saudi Arabia appears to be quite upbeat about the future
of oil prices. As per calculations, the Saudi budget plan is based on a Brent average of $50 a
barrel between 2020 and 2023.
“Using our own estimates for the breakdown hardest hit, it is already being adversely affected
of government revenues, we calculated that by the combination of oil’s fundamentals and the
the numbers presented in the budget statement pandemic. The Kingdom booked a deficit of USD
are based on an average oil price of around $50 29 billion for the second quarter and effected
a barrel between 2020 and 2023,” a UK-based some austerity measures although Riyadh insists
Goldman Sachs analyst informed. this is not austerity. A tripling of the Value Added
Nevertheless, even at $50 a barrel, which is far Tax (VAT), a cancellation of the so-called cost-of-
away from certain, Brent would be cheaper than living allowances, and the delay of some public
Saudi Arabia needs it, to shrink its defi cit. Even spending decisions along with the cancellation of
the Saudis themselves have acknowledged the others, were among the austerity measures.
effect the COVID-19 pandemic has had on their Nonetheless, the largest OPEC oil producer
finances. the governor of the Saudi Arabian appears to believe that oil prices will start
Monetary Authority had informed that the improving soon, if Goldman’s calculations are
financial outlook for the year remained uncertain. right. The bank is among the oil bulls that expect
In July 2020, the International Monetary Fund prices to recover beginning next year as the supply
(IMF) said that the price plunge and the oil and demand situation rebalances. However, fresh
production cuts would hit oil exporters in the tightening of movement restrictions in Europe
Middle East and North Africa hard, with the had hinted that this may not come to pass. Brent,
combined oil income of those countries expected once, had closed below USD 40 a barrel, and with
to plunge by USD 270 billion this year compared Libya ramping up oil production with lightning
to 2019. speed, it may be a while before the benchmark
recovers.
The Kingdom of Saudi Arabia is the biggest oil
economy in the Gulf and while it may not be the SMNS
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